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Encana (ECA) Stock Sinks As Market Gains: What You Should Know

Zacks Equity Research

Encana (ECA) closed the most recent trading day at $4.37, moving -1.8% from the previous trading session. This move lagged the S&P 500's daily gain of 0.36%. Elsewhere, the Dow gained 0.01%, while the tech-heavy Nasdaq added 0.27%.

Coming into today, shares of the energy company had lost 7.68% in the past month. In that same time, the Oils-Energy sector gained 1.76%, while the S&P 500 gained 3.98%.

ECA will be looking to display strength as it nears its next earnings release, which is expected to be July 31, 2019. On that day, ECA is projected to report earnings of $0.16 per share, which would represent a year-over-year decline of 23.81%. Meanwhile, our latest consensus estimate is calling for revenue of $1.54 billion, up 57.07% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $0.61 per share and revenue of $6.10 billion, which would represent changes of -29.07% and +2.77%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for ECA. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 11.05% lower. ECA is currently a Zacks Rank #3 (Hold).

Investors should also note ECA's current valuation metrics, including its Forward P/E ratio of 7.25. This valuation marks a discount compared to its industry's average Forward P/E of 8.81.

Meanwhile, ECA's PEG ratio is currently 0.96. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. Oil and Gas - Exploration and Production - Canadian stocks are, on average, holding a PEG ratio of 1.29 based on yesterday's closing prices.

The Oil and Gas - Exploration and Production - Canadian industry is part of the Oils-Energy sector. This industry currently has a Zacks Industry Rank of 108, which puts it in the top 43% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.

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